PROJECT REPORT ON

“ERP Implementation”

SUBMITTED BY

Yamini B. Asoor

SPECIALISATION:
Systems

Business Definition for: ERP

Enterprise resource planning: a software system that coordinates every important aspect
of an organization's production into one seamless process so that maximum efficiency
can be achieved

ERP Implementation Life Cycle

The process of ERP implementation is referred as d as "ERP Implementation Life Cycle".
The following are the steps involved in completing the lifecycle

Shortlist on the basis of observation

Selecting an ERP package for the company can nevertheless be compared with the
process of "Selecting the right Person for the Right Job". This exercise will involve
choosing few applications suitable for the company from the whole many.

Assessing the chosen packages

A team of Experts with specialized knowledge in their respective field will be asked to
make the study on the basis of various parameters. Each expert will not only test and
certify if the package is apt for the range of application in their field but also confirm the
level of coordination that the software will help to achieve in working with other
departments. In simple terms they will verify if the synergy of the various departments
due to the advent of ERP will lead to an increased output. A choice is to be made from
ERP implementation models.

Preparing for the venture

This stage is aimed at defining the implementation of ERP in all measures. It will lay
down the stipulations and criterias to be met. A team of officers will take care of this,
who will report to the person of the highest hierarchy in the organization.

Gap Analysis
This stage helps the company to identify the gaps that has to be bridged, so that the
companys practice becomes akin to ERP environment. This has been reported as an
expensive procedure but it is inevitable. The conglomerate will decide to restructure the
business or make any other alterations as suggested by GAP analysis inorder to make
ERP user friendly. Click here for a detailed study on GAP analysis. A choice is to be
made from ERP implementation models.

Business process reengineering

Changes in employee rolls, business process and technical details find place in this phase
of restructuring most popularly refered as business process engineering. For more details
on BPR click here.

Designing the System

This step requires lot of meticulous planning and deliberate action. This step helps to
decide and conclude the areas where restructing have to be carried on. A choice is to be
made from ERP implementation models.

In-house Guidance
This is regarded as a very important step in ERP implementation. The employees in the
company are trained to face crisis and make minor corrections as well because the
company can neither be at liberty nor afford the bounty to avail the services of an ERP
vendor at all times.

Checking

This stage observes and tests the authenticity of the use. The system is subjected to the
wildest tests possible so that it ensures proper usage and justifies the costs incurred. This
is seen as a test for ERP implementation.

The real test

At this stage the replacement takes place viz the new mechanism of operation and
administration takes over the older one.

Preparing the employees to use ERP

The employees in the organization will be taught to make use of the system in the day to
day and regular basis so as to make sure that it becomes a part of the system in the
organization.

Post Implementation

The process of implementation will find meaning only when there is regular follow up
and proper instruction flow thereafter and through the lifetime of ERP. This will include
all efforts and steps taken to update and attain better benefits once the system is
implemented. Hence an organization has to perform ERP implementation safely and
correctly.

What are the steps to be taken to account

the performance ERP software
programs in your organization?
Enterprise Resource planning ERP definition is not a technical aspect. Enterprise
resource planning is a huge investment on the part of company. Therefore it is necessary
to ensure the accountability of the ERP vendor.
An understanding of ERP and language is must to follow ERP best practices. The ERP
vendor cannot be blamed if the company does not follow the procedures correctly. On the
contrary when his services are not up to the industry standards he has to be held
responsible. But how to compute the services is another big question

Some of the steps that can be taken to compute are as underneath:

Preparations

The company should have a scale for evaluation right from the beginning stage. This will
help them to progress further in due course of time .This is the primary step in the process
.It includes everything is checking if the vendor has given the necessary supporting
services to the company in the process of implementation installation training and
relevant areas. This is very important because it forms the foundation for the ERP process
in the company. One needs to be clear about ERP best practices for this.

Evaluating the work

This step concentrates on the core function. The company must periodically make a note
of the work done. Any discrepancies will be brought to the vendor's notice immediately.
The vendor should extend his full fledged cooperation in making sure that the work gets
done as promised. Then only it is possible to scale ERP best practices.

Incase there are some inherent errors or technical flaws in the company the ERP vendor
can advise or suggest the company on how things are to be done. This step by and large
helps the company to find out if the vendor stands up to the promise in terms of delivery.
Understanding of ERP and language is a must.

Calculating ROI
ROI helps to directly account the performance of ERP software programs. In simple
terms ROI calculates the returns from ERP software programs. When the returns are high
or at least meets the expected and industry standards the performance of ERP software
can be rated as "promising". The ROI on ERP will not be merely achieved by ERP
implementation. The returns will be achieved only if the procedures are followed
properly. But if the software fails to deliver the required results even after following the
correct practices it shows lacuna on the part of ERP software. This will affect the rate of
ROI as well.
Following contracts terms

The performance of ERP software can be gauged on the basis of its working in relation to
the terms of contract. ERP software that accords to contractual terms in relation to
working definitely indicates better performance than vice versa.

Compare ERP software on the 8 following criteria modules:

1. Finance
2. Human Resources
3. Manufacturing Management
4. Inventory Management
5. Purchasing Management
6. Quality Management
7. Sales Management
8. Technology
9.

Compare ERP on Financial Criteria

The finance section encompasses modules for bookkeeping and making sure the
accounts are paid or received on time.

How to compare ERP software on finance? Simple. Compare ERP software on the
following financial criteria:

1. General Ledger
2. Accounts Payable (A/P)
3. Accounts Receivable (A/R)
4. Fixed Assets
5. Cost Accounting
6. Cash Management
7. Budgeting
8. Financial Reporting
9. Project Accounting
Compare ERP on Human Resources Management (HRM)

The section dedicated to human resources management (HRM) encompasses all

the applications necessary for handling personnel-related tasks for corporate
managers and individual employees.

Modules will include personnel management, benefit management, payroll

management, employee self service, data warehousing, and health and safety.

How to compare ERP software on human resources management? Simple. Compare

ERP software on the following HRMS criteria:

1. Personnel Management
2. Benefits
3. Payroll
4. Employee Self-Service
5. Data Warehousing
6. Health and Safety

Compare ERP on Manufacturing Management (Discrete and

Process)

Manufacturing management (for both discrete and process manufacturing)

encompasses a group of applications for planning production, taking orders, and
delivering products to the customer.

How to compare ERP software on manufacturing management? Simple. Compare ERP

software on the following manufacturing management criteria.

Because we want to compare ERP software systems on an apple-to-apple basis, we

need to make a difference between discrete manufacturing and process
manufacturing.

Discrete ERP Process ERP

1. Product Costing 1. Product Costing

2. Shop Floor Control 2. Shop Floor Control
3. Production Planning 3. Production Planning
4. Field Service and Repairs 4. Formulas/Recipes
5. Project Management 5. Process Model (Formulas +
6. Product Data Routings)
 Management (PDM) 6. Process Batch Control and
Reporting
7. Product/Item Configurator 7. Conformance Reporting
8. Process Manufacturing Costing

9. Material Management

Compare ERP on Inventory Management

Inventory management (IM) encompasses a group of applications for maintaining

records of warehoused goods and processes movement of products to, through and
from warehouses.

How to compare ERP software on inventory management? Simple. Compare ERP

software on the following inventory management criteria:

1. Inventory Management On-line Requirements

2. Processing Requirements
3. Data Requirements
4. Reporting and Interfacing Requirements (Inventory Management)
5. Locations and Lot Control
6. Forecasting
7. Reservations and Allocations
8. Inventory Adjustments

Compare ERP on Purchasing Management

Purchasing management encompasses a group of applications that controls

purchasing of raw materials needed to build products and that manages inventory
stocks.

It also involves creating purchase orders/contracts, supplier tracking, goods receipt

and payment, and regulatory compliance analysis and reporting.

How to compare ERP software on purchasing management? Simple. Compare ERP

software on the following purchasing management criteria:

1. Vendor and Supplier Profile

2. Supplier Rating and Profile
3. Requisitions and Quotations
4. Purchase Orders
5. Prices and Discounts
6. Vendor Contracts and Agreements
7. Purchase Order Management
 8. Procurement Reporting, On-line Reporting Capability
9. Repetitive Vendor Procurement
10. Procurement Receipts
11. Repetitive Vendor Procurement
12. Reporting

Compare ERP on Quality Management

Quality management encompasses applications for operational techniques and

activities used to fulfill requirements for quality control, inspection plan creation, and
management, defective item control and processing and inspection procedure
collection planning.

How to compare ERP software on quality management? Simple. Compare ERP

software on the following quality management criteria:

1. Defective or excess material return processing must update on-hand

2. Customer return file: awaiting disposition
3. Damaged material—corrective action and failure analysis available to
vendor on-line
4. Inspection required indicator by supplier and by item
5. Pre-inspection receipts registered as "inventory on hold"
6. On-line inquiry of inspection and material review board (MRB) queue
7. Validation against automated inspection criteria
8. Inspection disposition with audit trail
9. Disposition delinquency report
10. Quantity rejected
11. Reject reason codes

Compare ERP on Sales Management

Sales management encompasses a group of applications that automates the data

entry process of customer orders and keeps track of the status of orders.

It involves order entry, order tracing and status reporting, pricing, invoicing, etc. It
also provides a basic functionality for lead tracking, customer information, quote
processing, pricing & rebates, etc.

How to compare ERP software on sales management? Simple. Compare ERP software
on the following sales management criteria:

1. On-line Sales Management Requirements

2. Reporting and Interfacing requirements
 3. Available-to-Promise (ATP)
4. Pricing and Discounting
5. Customer Service and Returned Goods Handling

Customer Relationship Management (CRM) and E-commerce Requirements

Compare ERP on Technology

The technology category defines the technical architecture of the ERP system, and
the technological environment in which the product can successfully run. Criteria
include product and application architecture, software usability and administration,
platform and database support, application standards support, communications and
protocol support and integration capabilities. Relative to the other evaluation criteria,
best practice selections place a lower relative importance, on the product technology
category.

However, this apparently lower importance is deceptive, because the product

technology category usually houses the majority of the selecting organization's
mandatory criteria, which usually include server, client, protocol, and database
support, application scalability and other architectural capabilities. The definition of
mandatory criteria within this set often allows the client to quickly narrow the long
list of potential vendors to a short list of applicable solutions that pass muster
relative to the most basic mandatory selection criteria.

During the process of ERP software selection, a great deal of attention is given to the
functional capabilities of the software being evaluated. While this aspect is obviously
important, ignoring the technical mechanisms by which the ERP software actually
operates can be fatal to the ERP software solution selection project.

How to compare ERP software on technology? Simple. Compare ERP software on the
following technology criteria:

1. Architecture
2. User Interface
3. Client and Server Platforms
4. Application Tools
5. Workflow and Document Management
6. Reporting
Errors in ERP implementation
ERP implementation failure is a major concern for companies. ERP implementation
needs to be done without allowing any scope for limitations and mistakes. If it is not done
perfectly then the success of ERP system will remain a question mark.

The first and foremost factor that discourages ERP in an organization is the exorbitant
costs and investment. The second one is the drafting of an ERP implementation plan to
ensure ERP implementation success.

Enhancement of ERP'S functions

Erg's scope gets wider as it is implemented in an organization. There is a call for

including many tasks under the purview. This dilutes the ERP Existing system after
modifying it a couple of times. Repeated change in configurations and systems will only
add to the confusions. When the functions are operated by a machine it becomes
increasingly difficult to make the necessary changes. These troubles arise when they are
not foreseen and addressed in the implementation stage. They have to be given a place in
ERP implementation plan.

Organizational reaction to change

Changes do happen quickly and immediately in the organization after ERP is
implemented. But if there is no proper understanding of the process or mishandling of
information, it will result in questioning the ERP process. If updating is not done in the
machine it will only affect the business process and create unnecessary confusions. The
changes don't happen all on a sudden in an organization and expecting it immediately
will only cause needless disappointments. In spite of all this expecting every member in
the organization to respond proactively will not happen. If that happens the chances of
ERP implementation success are great.
Inflating resources for ERP implementation
The implementation time and money always exceeds the promises and stipulated
deadline and amount. This makes companies to lose faith on ERP and ERP vendors. They
think that ERP vendors overplay on the costs and time required but it is not so. Infact
they are aware of it in the very beginning stage itself but have a different reason for
concealing. They don't disclose it in the beginning because it would look like
exaggerating. Infact no one would like to lose a prospective business and vendors are
equally aware of the fact that "Truths are always bitter"! However many people mistake
this to be the cause for ERP implementation failure.
Organizations non adherence to the stated principles
Organizations largely experience a wide gap between practices and preaching .Infact this
has a negative effect on the entire business scenario itself. The voracity and impact of
loss could be greater and more devastating when this turns out to be true even in the case
of ERP. Since ERP successful functioning is purely based on following the laid down
procedures the lag could throw a serious challenge on ERP'S potential right from the
stage of its implementation.
Problem of Transformation due to ERP
Employees find it hard to digest the transformations that place in an organization all on a
sudden due to ERP implementation. Infact employees exhibit positive signs as everything
goes right in the first place. But as one progresses he finds difficult to work as it gets
more complex. The initial interest and expectation turns into apprehensiveness in due
course of time. There is another category of people who did not encourage ERP right
from the conceptualization stage. Their state of mind during these circumstances deserves
no special mention.

The acronym "ERP"—for enterprise resource planning—was defined in 1990 by

Gartner, Inc. (Stamford, CT). That was then. This is now. Gartner's Research
Director in the Business Process and Applications Group, Brian Zrimsek, sees three
major changes affecting ERP now:

1. Process extensions. "Today, ERP is still for the enterprise, but the enterprise is
changing. It's becoming more virtual." Consider how the OEMs are outsourcing
aspects of car design and the rise in contract manufacturing. Both of these business
processes span physical enterprise boundaries. "ERP starts to struggle as you
outsource more activities," says Zrimsek. The build/made items in ERP become
bought/purchased items. The visibility that comes from routings, work-order
statuses, and work-in-process data acquisition gets lost. Hence the drive for
collaborative information systems among outsource partners. But remember, points
out Zrimsek, "ERP wasn't built with the Internet in mind."

2. Verticalization of functionality. ERP was initially built for manufacturing and

distribution. Now, fully integrated, feature-rich, ERP systems have extensions for
supply chain management (SCM), customer relationship management (CRM),
warehouse management, and several other business processes. Zrimsek has seen
ERP deployed in just about all industry sectors; food, petrochemical, aerospace and
defense, the armed services, and even the public sector. Consequently, ERP vendors
are deepening the functionality of their systems to meet the needs of the target
industries.

3. Architecture. Before client-server computing in the early 1990s, which was kind
of the birth of ERP, resource planning systems were very monolithic. ERP
deployments were basically mainframe deployments. Upgrading meant taking out
the whole thing and putting in a new system. Today, users are loathe to pay 20% to
60% of what they paid in system implementation for upgrades/migrations. This is
putting pressure on ERP vendors to provide software that is open, component-
oriented, and migratable in pieces—thereby leaving existing, desired, ERP
components (as well as SCM, CRM, etc.) in place and functional.
Add that all together
and you see why
Gartner is coining the
term "ERP II" to label
the "next act in the
evolution of ERP, which
expands beyond
enterprise-centric
optimization and
transaction processing
to a new focus on
improving enterprise erp's Evolution Into ERP II
competitiveness." So,
dismiss anything written
that ERP is dead. "It's not accurate to say there's nothing happening in ERP. There's
lots happening. ERP is still growing and evolving," exclaims James Shepherd, Senior
Vice President at AMR Research (Boston, MA). ERP is still doing what it's supposed
to: provide a common database for an entire enterprise. "ERP is truly the enterprise
backbone. That can't go away," says David Schaap, Product Marketing Manager for
BRAIN North America, Inc. (Ann Arbor, MI). If anything, ERP is manufacturing's
equivalent to Microsoft's Office Suite: lots of core functionality and changes that are
far more incremental than they once were.

Automotive ERP
"What's new in ERP is no different than what has always been new in the product
category currently known as ‘ERP,' formerly ‘MRP II' [manufacturing resource
planning], formerly ‘MRP' [material requirements planning]: The difference has to do
with what's being added to ERP," says Shepherd. That is, the scope, features, and
functions of ERP continue to expand. Some of these, points out Shepherd, are
invented by the ERP vendors; most are invented by small, niche vendors, later co-
opted by the ERP vendors. "That's progress as usual in ERP," Shepherd adds.

And yet, ERP still doesn't fit automakers very well mainly because they have evolved
their own way of doing business, which is sufficiently different than other industry
sectors. However, ERP does fit the operations of the suppliers. Nowadays, suppliers
are implementing ERP packages rather than writing their own systems or modifying
"off-the-shelf" to some unrecognizable system state, as they did in the past. One key
reason is that because automotive is a key target market for the ERP vendors;
automotive-specific functionality is now the "price of admission." For example, look
at Release Management from Oracle Corp. (Redwood Shores, CA). This module
manages customer schedules, then reconciles demand with existing requirements. It
posts shipping and sequence schedules, and generates updates to sales orders and
forecasts. The module lets OEMs and suppliers automate the receipt and processing
of inbound planning, shipping, and production sequence schedules. As necessary, the
module generates exceptions if data is missing or invalid; valid schedules will
continue to be processed. Once validated, customer schedules are archived and
accessed by schedule history, original schedule date/quantity, associated sales order,
and customer authorization information using the Release Management Workbench.
Several automotive
companies require that
trading partners use
cumulative accounting;
that is, send cumulative
ship-to-date quantities
or discrete requirement
quantities with a
cumulative total
indicating what erp Evolving Into Something More
quantities are needed ERP's expansion today involves six elements that touch business, application,
over the period. Oracle's and technology strategies.
Release Management
converts these cumulative quantities into net quantities. This forecasted demand is
reconciled with existing demand in Oracle Order Management and Oracle Planning.
The reconciled customer demand goes to Oracle Shipping Execution, which manages
picking, packing, and shipping inventory, as well as issuing the appropriate ship
notice and invoice information through an EDI-related gateway to the OEM's trading
partners. For non-Oracle users, Oracle's Trading Partner Architecture helps integrate
trading partner-code to Oracle Release Management, Order Management, and
Shipping Execution.

Is this still ERP? Yes!

The recently announced Rapid Planning Matrix (RPM) from SAP America, Inc.
(Newton Square, PA), is an enhancement to the production planning and detailed
scheduling in SAP's Advanced Planner and Optimizer (APO). That said, RPM is more
an MRP engine. Running in main memory, RPM processes vast quantities of data and
spits back the exact work content of sales orders per work area, including due-dates
and line positions. It can explode 100,000. . .150,000. . .whatever, fully configured
car sales orders in one to 1.5 hours, a process that could take up to 10 days in R/3.

RPM lets companies run MRP after every shift, see demand for the next three to five
weeks, and push consistent and accurate information down the supply chain. It also
identifies potential bottlenecks and generates reliable delivery dates to users. This is
crucial as automotive moves from a make-to-stock operation to build-to-order. This
capability is also, says
Juergen Helmle, SAP's
Vice President of
Automotive, the starting
point of supply chain
planning. "RPM is
technically a part of our
SCM product, not a part
of R/3, but I would still
call it a core ERP
function."

SAP has also recently

announced its Packaging
Logistics module.
(Delphi and other
automotive suppliers
The critical element of Gartner's ERP II vision is that various functions are
integrated such that business processes will be executed seamlessly—really
seamlessly!
call this "Label Management.") This module manages packing instructions and multi-
level packing bills of material. The module lets suppliers set packing instructions
about what materials are to be packed in what type of container, and in what
quantity. With this, suppliers can ship different part numbers in different containers
—on the same pallet. Shipping palletized containers, even with mixed parts, saves in
inventory and materials management on the shop floor. The module also manages
returnable packaging, including monitoring the number of returnable packaging
items in circulation.

Are these ERP functions? Yes, answers Helmle, even though it runs across material
management, sales and distribution, and production planning.

ERP II considerations
There are a couple of ironies with ERP. The first revolves around the very issue of
system complexity and the reality that software/systems integration is both difficult
and expensive—COM, CORBA, Java, .NET, XML, and Web-based technologies
notwithstanding. This reality, now more than ever, supports the argument for
standardizing ERP, CRM, SCM, and the rest of the alphabet soup on one or two large
ERP vendors, even if the resulting system is not "best of breed." Says Paul Hebeler,
Oracle's Automotive Industry Director, "There has to be a compelling reason to going
with multiple packages."

(Hebeler also confirms that unlike the other major ERP vendors, Oracle plans to be
the one-source provider for that alphabet soup of enterprise applications. "And don't
forget, we have the database, too," he adds. When quizzed that supposedly no
vendor can do it all, Hebeler responds, "That's probably true. It takes a special
vendor.")

Suggests BRAIN's Schaap, "People should still be asking their ERP providers to keep
them current in terms of new industry mandates, which are constantly changing, and
additional incremental functionality to address the changing market." The larger ERP
vendors are more apt to do this, especially as mergers, acquisitions, and outright
business failures take their toll on small ERP companies. On the other hand, a niche
vendor might be better able to provide software for specific ERP-related (or soon-to-
be ERP-related) tasks.

This "bigger is better" approach to ERP has other ramifications. Vendors now have
more "touch points" within the enterprise to sell ERP, whether that be
manufacturing, finance, SCM, CRM, and so on. For customers, though, ERP is
becoming—if it hasn't already—more unwieldy, more difficult, and more expensive as
it tries to deal with the staggering complex problem of enterprise management.

Despite the best of intentions, concludes Shepherd, "the problem of managing a

business doesn't get any simpler. Now I have to sell my products 900 ways, I have
to bring lots more new products to market in a week instead of years, and I'm global
instead of local. It's a much more complex environment than it used to be."
Conclusion
ERP vendor has to address all these issues in order to ensure that there is ERP
implementation success. If everything goes as per ERP implementation plan then there
are no chances of ERP implementation failure.